High returns in 2024 – but what about next year?
Indications suggest that this year will be among the top performers of the past decade, based solely on returns. With just one month left in 2024, customer returns range from 12.7 to 15.4 per cent for a medium-risk customer with 15 years until retirement.
This puts returns close to the record year of 2019, which saw returns in the region of 17-19 per cent. While we may not quite reach those heights this year, positive sentiments on financial markets and an additional interest rate cut from the ECB later in December mean it is not impossible that returns will grow slightly further in December. This would put 2024 among the absolute best years for returns.
The returns in 2024 have been largely driven by a few companies, particularly the strong performance of US shares, which delivered a return of 27 per cent. This is in stark contrast to our own backyard, where shares have delivered a return of 2 per cent after an autumn of falling share prices. At Velliv, we are starting to see the effects of our new investment strategy, which has secured us returns at the top end of the top of the market over the past few months.
Expectations for 2025
As always, predicting the future is one of the most difficult challenges, but we know that 2025 will be a year of change, with Donald Trump as the new US president and a world that looks more divided than it has for many years. This is best illustrated by a US that is strong with robust growth and solid development, while Europe, on the other hand, faces increasing headwinds, including a struggling German manufacturing sector. Alongside increased protectionism in the US, this is expected to have an impact on interest rates.
On that basis, we expect interest rates to fall faster in Europe than in the US. Conversely, we expect the US stock market to be tone-setting again next year compared to the rest of the world.
Overall, we believe there will be a positive development in 2025, even if we do not expect returns on the same level as in 2024. If next year ends with a return around half that of this year, we will not be surprised based on our current knowledge of what the future holds.